Federal reserve
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Federal Reserve. Monetary Policy- The Fed’s power over interest rates and amount of $ in reserve Fiscal Policy- The Government power over taxes and spending. Contractionary Policy (Tight $$) – during inflation 1. Increase interest rates

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Federal Reserve

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Federal reserve

Federal Reserve


Federal reserve

  • Monetary Policy-

  • The Fed’s power over interest rates and amount of $ in reserve

  • Fiscal Policy-

  • The Government power over taxes and spending


Federal reserve

  • Contractionary Policy (Tight $$) – during inflation

  • 1. Increase interest rates

  • 2. Increase reserve requirement ($$ banks must have in reserve)

  • 3. Increase taxes

  • 4. Decrease government spending


Federal reserve

  • Expansionary Policy (Easy or Loose $$) – during recession/depression

  • 1. decrease interest rate (easy to buy)

  • 2. decrease taxes

  • 3. decrease reserve requirements (banks have more $$ to loan)

  • 4. increase government spending


Federal reserve

  • Progressive Tax-

  • The higher one’s income the higher the percentage of tax (ex. Income tax)

  • Regressive Tax-

  • Tax imposed at a flat rate (ex. Sales tax)

  • Excise – tax on manufacture, sale, and consumption of goods; often called “hidden tax” (ex. Tax on fuel, alcohol, tobacco


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